Tag Archives: PFRS

Retirement Planning: Questions to Ask Yourself

retirement planning - things to think aboutAfter months or years of retirement planning, you’re probably looking forward to the day when you apply for your NYSLRS pension. But before you retire, there are a few questions you should ask yourself. After all, by filing for retirement, you’re making critical decisions about your financial future. And once you’ve retired, some of those decisions will be irrevocable. Whether your planned retirement date is just around the corner or a few years off, asking these questions now could help you avoid costly mistakes.

Do I have all the service credit I think I have?

Under some retirement plans, service milestones (20 years, 30 years, reaching full retirement age) can have a big impact on the amount of your benefit. If you’re aiming for one of these milestones, but retire just short of reaching it, your pension will be less than you might be expecting. To make sure you have enough service credit on your planned retirement date, sign in to Retirement Online to check the most up-to-date estimate of your total service credit.

Do I have previous service credit I want to purchase?

You may be able to buy credit for previous public employment or military service, which in most cases would increase your pension.  

If you are planning to purchase service credit, including military service, you should do that as soon as possible, especially since you can’t purchase service credit after you retire. You can apply for additional credit in Retirement Online or by submitting a Request to Purchase Service Credit form (RS5042). You may also wish to read our publication Service Credit for Tier 2 Through 6.

Do I have a balance on a NYSLRS loan?

If you have an outstanding balance on a NYSLRS loan, you should pay it off before you retire. If you retire with an outstanding loan, your pension will be permanently reduced.

While Employees’ Retirement System members may repay their loan after retiring, they must pay back the full amount of the outstanding balance that was due at retirement in one lump-sum payment. Once the loan has been repaid, their pension benefit will be increased from that point going forward, but it will not be adjusted retroactively back to their date of retirement.

You can use your Retirement Online account to check your loan balance, make a lump-sum payment or increase your payment amount. For more information, visit our Loans page.

Retirement Planning Resources

The more you know about retirement and the retirement process, the better off you’ll be. Here are some resources that can help with your retirement planning:

How Full-Time and Part-Time Service Credit Works

Service credit plays a vital part in your pension calculation and your eligibility for other NYSLRS benefits. As a NYSLRS member, you earn service credit by working for an employer who participates in the Retirement System. Your paid public employment is creditable. You would not, however, earn credit for any period when you are not receiving a salary, such as an unpaid leave of absence. You would earn credit for both full-time and part-time employment, but if you work part-time, the service you earn is pro-rated.

Earning Service Credit When You Work Full Time

When you work on a full-time, continuous basis throughout your career, we’ll calculate your total service credit from your date of employment up until the date you leave paid employment. Most full-time workers earn a year of service credit for working 260 workdays a year. For a full-time, 12-month employee, 260 workdays equal a full year. (If you work in an educational setting, you can read about earning service credit in our blog post, How School Employees Earn NYSLRS Service Credit.)

Earning Service Credit When You Work Part Time

Your service credit is prorated if you work part time. Part-time employment is credited as the lesser of:

the number of days worked ÷ 260 days

or

your reported annual salary ÷ (the State’s hourly minimum wage × 2,000)

You can think of it like this: let’s say you work 130 days in a year. If a year’s worth of service credit is earned for working 260 days full time, you’d earn half a year (0.5) of service credit for your part-time work.

How Part-Time Service Credit Works

Check Your Service Credit in Retirement Online

Retirement Online is the fastest way to check your current total estimated service credit. Once you sign in, go to the ‘My Account Summary’ section of your Account Homepage and look under “Account Information.”

You can also use Retirement Online to request credit for public employment from before you joined NYSLRS. If you’re eligible to purchase previous service credit, it’s a good idea to file your request as early in your career as possible because:

  • Records we need to verify your service will be more readily available.
  • If there is a cost, it will be less expensive than if you wait to purchase credit before retirement.
  • Your retirement benefit will be processed more quickly if your service credit request has been reviewed or processed prior to retirement.

For more information, please read our publication Service Credit for Tiers 2 through 6. You may also wish to refer to your specific retirement plan booklet, available on our Publications page.

NYSLRS – One Tier at a Time: PFRS Tier 6

When you join the New York State and Local Retirement System (NYSLRS), you’re assigned a tier based on the date of your membership. There are six tiers in the Employees’ Retirement System (ERS) and five in the Police and Fire Retirement System (PFRS). Your tier determines such things as your eligibility for benefits, the calculation of those benefits, death benefit coverage and whether you need to contribute toward your benefits.

Our series, NYSLRS – One Tier at a Time, walks through each tier to give you a quick look at the benefits in both ERS and PFRS. Today’s post looks at PFRS Tier 6. Anyone who joined PFRS on or after April 1, 2012 is in Tier 6. Tier 6 members currently make up almost 40 percent of PFRS membership, totaling 13,956 members, making it the second largest tier in PFRS.

About Regular Plans and Special Plans

Under a regular plan, you need to reach certain age and service requirements to receive your NYSLRS pension. If you’re covered by a special plan, there is no age requirement, and you can receive your pension after completing 20 or 25 years of service.

Nearly 80 percent of PFRS members are in plans covered under Sections 384, 384-d, 384-e or 384-f of the Retirement and Social Security Law. Read our Police and Fire Retirement System blog post for information about different PFRS plans.

Check out the graphic below for the basic retirement information for PFRS Tier 6 members.

PFRS Tier 6

Where to Find PFRS Tier 6 Information

If you’re a PFRS Tier 6 member, please find your retirement plan publication from the list below for more details about your benefits. If you’re not sure what retirement plan you’re in, you can find that information in the My Account Summary section of your Retirement Online account. You can also check your Member Annual Statement, ask your employer or email us using our secure contact form.

For special plans under miscellaneous titles, please visit our Publications page. Check out other posts in the PFRS series:

Overtime Limits for Tier 5 and 6 Members

The formula used to calculate a NYSLRS pension varies by tier and plan, but your credited service and final average earnings (FAE) are the main factors. You earn service credit for paid service with participating employers, and you also may purchase credit for previous public employment. Your FAE is the average wage you earned during the period when your earnings were highest (36 consecutive months for Tier 5 and 60 consecutive months for Tier 6).

Your FAE can include overtime pay you earn during that period, but for Tier 5 and 6 members there are limits to how much overtime can be used to calculate your pension.

You can still earn overtime pay beyond the limit — it just won’t be used in your FAE. Members also aren’t required to make contributions on overtime pay that is above the limit.

Overtime Limits for Tier 5 and 6 Members

Tier 5 Overtime Limits

The overtime limit for Tier 5 Employees’ Retirement System (ERS) members increases each calendar year by 3 percent. In 2022, the limit for Tier 5 ERS members is $21,386.41.

For Tier 5 Police and Fire Retirement System (PFRS) members, the overtime limit is 15 percent of your regular earnings each calendar year.

Tier 6 Overtime Limits

The overtime limit for Tier 6 ERS members increases each calendar year based on the annual increase of the Consumer Price Index (CPI). In 2022, the limit for Tier 6 ERS members is $18,233.

For Tier 6 PFRS members, the overtime limit is 15 percent of your regular earnings each calendar year.

Learn More

Find more information about the overtime limit, FAE and retirement calculations in your retirement plan booklet, available on our Publications page.

Ten Things Every NYSLRS Retiree Should Know

Even after you retire, it’s important to stay informed about your NYSLRS benefits. Here are ten things every NYSLRS retiree should know.

NYSLRS retiree
  1. Your retirement benefits are guaranteed by the State Constitution. Under Article 5, Section 7, your pension benefit cannot be “diminished or impaired.”
  2. The Common Retirement Fund, the pool of money your retirement benefits are paid from, is safe and secure. It has been widely recognized as one of the best-funded and best-managed public pension funds in the nation.
  3. Your NYSLRS pension is not subject to New York State or local income taxes, but it may be subject to federal income tax. Visit our Taxes and Your Pension page for more information.
  4. If you move to another state, your pension may be subject to that state’s income tax. Find out which states tax NYSLRS pensions.
  5. More than 95 percent of NYSLRS retirees use direct deposit for their monthly payment and their payments promptly arrive in their accounts on the last business day of each month. You can find out when your next pension payment is coming by checking our online pension payment calendar.
  6. You can stay informed about your benefits with Retirement Online. Creating an account is easy, and in many cases, you can use Retirement Online instead of sending in forms or calling NYSLRS.
  7. If you need proof of your retirement income to rent an apartment or get a mortgage, you can generate a pension verification letter in Retirement Online.
  8. Once you become eligible for a cost-of-living adjustment (COLA), you will receive annual increases in your pension amount. When your net benefit amount changes, NYSLRS will inform you.
  9. Your beneficiaries may be entitled to a death benefit after you die.
  10. A Guide for Retirees is a handy resource on our website. It provides important information about your benefits and the services NYSLRS provides for its retirees.

Not retired yet? Read our blog post Ten Things Every NYSLRS Member Should Know.

Popular Blog Posts You May Have Missed

In 2021, NYSLRS members showed a keen interest in posts that helped them learn more about their retirement benefits. In case you missed them, or just want to take another look, here are some of our most popular blog posts from the past year.

most popular blog posts of 2021
 
  1. Tier 6 Benefits – A Closer Look
    Nearly half of all NYSLRS members belong to the Employees’ Retirement System (ERS) Tier 6. Here is a look at how their pensions will be calculated.

  2. Retirement Online Makes Applying for Retirement Fast, Easy
    Many members have discovered the convenience of filing for a service retirement benefit online. You won’t need to have anything notarized and you can skip a trip to the post office.

  3. Tier 3 & 4 Members: When Is The Right Time To Retire?
    Many Tier 3 and 4 members are close to retirement. But their pension amount will depend on several factors, including when they retire. Here is some information to help you get the timing right.

  4. The Police and Fire Retirement System
    The Police and Fire Retirement System (PFRS) is the smaller of the two NYSLRS retirement systems. The vast majority of PFRS members are in special retirement plans that allow for retirement after 20 or 25 years of service.

  5. What is a Defined Benefit Plan?
    As a NYSLRS member, you are part of a defined benefit plan. But what does that mean and how will it affect your retirement?

Thank you for following New York Retirement News. We look forward to providing you with more information about your NYSLRS benefits and other retirement topics throughout 2022.

Ten Things Every NYSLRS Member Should Know

There’s a lot to know about being a NYSLRS member, and sometimes it can feel overwhelming learning about your retirement benefits when you join or when you’re getting ready to retire. That’s why we’d like to focus on ten things that are important to all our members.

NYSLRS member
  1. Your retirement benefits are guaranteed by the State Constitution. Under Article 5, Section 7, your pension cannot be “diminished or impaired.”
  2. You are part of a defined benefit pension plan. A defined benefit plan provides a lifetime benefit at retirement based on earnings and years of service.
  3. The Pension Fund, the pool of money your retirement benefits will be paid from, is safe and secure. It has been widely recognized as one of the best-funded and best-managed public pension funds in the nation.
  4. Your retirement plan booklet contains a wealth of information about your benefits.
  5. Your tier determines your eligibility for benefits and how those benefits are calculated.
  6. Becoming vested is a key milestone in every NYSLRS member’s career. Once you’re vested, you’ll be eligible for a pension even if you leave public employment before retirement age.
  7. Your final average earnings (FAE) is a major factor in calculating your NYSLRS pension, rather than being dependent on the contributions you make toward retirement.
  8. You can estimate your pension online. Most members can use Retirement Online to create a benefit estimate based on information we have on file for them. (And if you can’t use this calculator, we have alternatives for you.)
  9. You can stay informed about your benefits with Retirement Online. Creating an account is easy, and in many cases, you can use Retirement Online instead of sending in forms or calling NYSLRS.
  10. Retirement savings can supplement your pension and Social Security and give you more flexibility in retirement. The sooner you start, the more time you have to grow your savings.

Already retired? Read our blog post, Ten Things Every NYSLRS Retiree Should Know.

Give Your Retirement Savings a Boost

If you’re already building your retirement savings, you already understand how those savings, along with Social Security, work together with your pension to help provide financial stability in retirement. Financial advisors call this the “three-legged stool.”

But why not take it a step further and give your retirement savings a boost? Even a small increase could make a big difference over time, while having minimal impact on your take-home pay.

How much of a difference would it make? You can check it out yourself using this online calculator and your own salary and savings information. Calculate the impact of your current savings, then try the same calculation with an additional 1 percent of your earnings. For example, if you’re saving 5 percent of your pay, see what saving 6 percent would do by the time you expect to retire.

retirement savings

Impact on Your Paycheck

Fortunately, adding a small amount to your retirement savings won’t have a substantial impact on your paycheck. For example, if you’re making $60,000 a year, 1 percent is only $600. That’s just $50 a month or, if you are paid every other week, about $23 per payday.

The impact on your take-home pay would be even less if you save in a tax-deferred plan because you won’t have to pay income tax on those earnings until after you retire. The New York State Deferred Compensation Plan’s paycheck impact calculator can help you estimate how increased savings would affect your paycheck. (You don’t have to have a Deferred Compensation account to use their calculator. The New York State Deferred Compensation Plan is not affiliated with NYSLRS.)

When to Increase Retirement Savings?

The sooner you boost your savings, the better off you’ll be. But if you’re not ready to increase your savings right now, then try this: Schedule your increase to coincide with your next raise. That way, you may not even miss the money.

What is a Defined Benefit Plan?

As a NYSLRS member, you are part of a defined benefit plan, also known as a traditional pension plan.

Your pension is based on a preset formula that takes into account your salary and years of service. It will not be based on your individual contributions to the Retirement System.

If you are vested and retire from NYSLRS, you will receive a monthly pension payment for the rest of your life.

Defined Contribution Plans

Defined benefit plans are often confused with 401(k)-style retirement savings plans, which are known as defined contribution plans.

With a defined contribution plan, the employer, employee or both make contributions to an individual retirement account, and the money in the account is invested. In most cases, it is the responsibility of the employee to make investment decisions, or the plan may offer pre-packaged investment options. At retirement, the employee will have an account that includes the accumulated value of contributions and investment returns, minus any fees.

The amount of money the employee has at retirement is dependent on the investment returns of the individual account, so market downturns, especially near retirement, can affect the value of the benefit. The employee also can run the risk of outliving their savings.

defined benefit plan

NYSLRS’s Defined Benefit Plans

NYSLRS administers more than 300 retirement plan combinations, but all are defined benefit plans and share certain features. NYSLRS plans:

  • Provide a guaranteed lifetime retirement benefit;
  • Offer a pension that is based on final average earnings and years of service;
  • Provide a right to pension benefits (vesting) with five years of service credit;
  • Build a cost-of-living adjustment (COLA) into pensions to help offset the effect of inflation; and
  • Include disability retirement and death benefits.

To find out details about your own NYSLRS plan, check your retirement plan booklet. You can find a copy on the Publications page of our website. Read this blog post for help locating your plan book. Your plan is listed on your Retirement Online account page.

Advantages of Defined Benefit Plans

With defined benefit plans, retirement assets are pooled, and the investment risk is shared. These plans are usually administered by professional managers, whose long-term investment strategies reduce the impact of market turmoil. With defined contribution plans, individual employees bear the brunt of investment risk, so a dip in the stock market can reduce their retirement income.

Defined benefit plans provide important advantages for state and local government employers. For one, offering these plans makes it easier to recruit and retain qualified employees, particularly police officers, fire fighters and teachers. Employers can also reduce the risk of employee turnover, which could help cut training costs and improve productivity.

Defined benefit plans also help support state and local economies because they provide a steady, reliable stream of retirement income for many retirees across New York and the nation.

Read more about the advantages of defined benefit plans.

Countdown to Retirement – 1-3 Months to Go

Congratulations! After years of hard work and planning, the big day is almost here. It’s time to file for retirement.

You must submit your service retirement application 15 to 90 days before your retirement date.

Countdown to Retirement – 1-3 Months to Go

Filing Online

Online filing offers a secure and convenient way to apply for a service retirement benefit. You can upload needed documents instead of having applications notarized and taking them to the post office. You can also check on the status of your application once you submit it through Retirement Online. To get started, sign in to your Retirement Online account, scroll to the ‘My Account Summary’ section and click the “Apply for Retirement” button.

From there, you’ll go through a series of screens where you’ll be able to:

  • Choose your retirement date;
  • Get an estimate of the pension payment options available to you;
  • Select a pension payment option and beneficiary;
  • Have federal taxes withheld;
  • Sign up for direct deposit; and
  • Upload required documents, such as proof of date of birth.

After you click the “Submit” button, do not close your browser until you receive a confirmation message saying your application has been successfully submitted.

Once you submit your application, you will see a summary page that will include all the information that you have submitted through Retirement Online. Review this information to be sure that your online application is complete and your chosen option benefit and beneficiary information are accurate. This is very important since there are specific deadlines for selecting or changing a pension option and beneficiary.

If you don’t have a Retirement Online account, you can sign up today.

Filing by Mail

If you prefer, you can submit a paper retirement application. Complete an Application for Service Retirement (RS6037) and mail it to NYSLRS. (Do not give your retirement application to your employer.) Your application must be signed, notarized, and received by NYSLRS. We recommend that you mail your application “certified mail, return receipt requested.”

If you have received a recent pension estimate and you know which pension payment option you want, you should include your pension payment option form when you mail your retirement application. If you have not received an estimate, we will send you one, along with an option form, after we receive your application, but you must select an option within the deadlines required by law.

If you file by mail, you must also send us the following documents:

 We cannot start paying benefits until we receive proof of your date of birth.

If you have questions about filing for your retirement benefits, you can schedule a pre-retirement telephone consultation. To make an appointment, call 1-866-805-0990 (or 518-474-7736 in the Albany, NY area), press 2, then follow the prompts.

Read the Rest of Our Countdown to Retirement Series

This is the final installment of our Countdown to Retirement series. Missed our earlier posts? Catch up with them here: